HMRC - it's tax time again

[Seeker]

I filled out my self assessment tax form for tax year 21-22. Prior to do doing it, I do a rough calculation as to how much tax I owe and this year it came to about £2000.

When I had completed the form, it told me I owed £2134, so I was roughly correct, plus a further £1067 on account, giving a total of £3200. What? Where did that come from?

So I call HMRC (FYI - if you call the Self Assessment number and the AI operator doesn't recognise your NI number it puts you in the PAYE queue - and doesn't tell you).

Anyway, 40 minutes later I speak to this young Scottish lady and the explanation she gave made my head explode. We had to go over it two or three times and I'm still not sure I comprehend.

If you owe over £2000 tax then HMRC makes you pay half of your tax bill "on account" in addition to whatever you actually owe.

HMRC thus gets to keep, in my case, £1067 which will be deducted from next year's tax bill*. What a con!

Normally, I pay my taxes promptly but this year I'll wait till the last minute.

* I think.

[Luckypants]

If you've ever been self employed in the UK, you will be painfully aware of 'on account' tax. It allows the government 'borrow' money at a zero interest rate. glad I'm out of that and back PAYE.

[Seeker]

Originally Posted by Luckypants

If you've ever been self employed in the UK, you will be painfully aware of 'on account' tax. It allows the government 'borrow' money at a zero interest rate. glad I'm out of that and back PAYE.

I'm retired but the tax man never falters in pursuing their pound of flesh* goal, I guess.

"Nothing is certain but death and taxes."

* unless you're an MP with Cayman Islands accounts.

[Sir Trev]

Originally Posted by Luckypants

If you've ever been self employed in the UK, you will be painfully aware of 'on account' tax. It allows the government 'borrow' money at a zero interest rate. glad I'm out of that and back PAYE.

Sounds familiar. And I'm also glad to be back on PAYE partly for that reason. Still got a few years before retirement but will stick with fixed term contracts or, at a push, umbrella deals until I get there. Thankfully my tax affairs are simple now and I do t have to do SA any more - yay!

[Bibio]

if your owing the tax man that amount then your raking it in so dont complain too much. go speak to an accountant they might shed some better light on things or even save you money.

[Ruffy]

Originally Posted by Bibio

if your owing the tax man that amount then your raking it in so dont complain too much. go speak to an accountant they might shed some better light on things or even save you money.

£2000/year in tax isn't raking it in. That's about £22k gross PAYE equivalent isn't it - hardly a large income, well below UK average.